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    Corporate Social Responsibility and Cost Stickiness

    Access Status
    Fulltext not available
    Authors
    Habib, A.
    Hasan, Mostafa
    Date
    2016
    Type
    Journal Article
    
    Metadata
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    Citation
    Habib, A. and Hasan, M. 2016. Corporate Social Responsibility and Cost Stickiness. Business & Society. 58 (3): pp. 453-492.
    Source Title
    Business & Society
    DOI
    10.1177/0007650316677936
    ISSN
    0007-6503
    School
    Department of Finance and Banking
    URI
    http://hdl.handle.net/20.500.11937/49954
    Collection
    • Curtin Research Publications
    Abstract

    This article examines the effects on cost stickiness of firms’ involvement in corporate social responsibility (CSR) activities. Cost stickiness represents asymmetric cost behavior whereby the magnitude of cost increases in response to an increase in the activity level is greater than the magnitude of cost decreases with a decrease in the activity level. We hypothesize that CSR involvement requires ongoing investments in value-creating activities; hence, it is difficult to scale down committed resources instantly even when the activity declines. We use two different CSR proxies and find support for the CSR-related cost stickiness hypothesis. We further decompose CSR into strategic and tactical CSR and find that cost stickiness is more pronounced for strategic CSR. Finally, we examine the CSR-related cost behavior pattern across business cycles and find some evidence of cost stickiness during an expansionary phase of the economy and cost anti-stickiness during a recessionary phase but only for the tactical CSR component.

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